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Keynote Address by Elisabetta Capannelli at the International Multidisciplinary Conference on Sea, Transport and Logistics

Elisabetta Capannelli, Country Manager for CroatiaInternational Multidisciplinary Conference on Sea, Transport and Logistics 2017 Session: “The Port of Rijeka as the Gateway to the Baltic-Adriatic Corridor”Rijeka, Croatia

As Prepared for Delivery

Honorable Hosts from the Port of Rijeka Authority, the Cities of Rijeka and Opatija, and Primorsko-Goranska County,

Distinguished Guests,

It is an honor to be addressing you in the opening session of this important conference.

The World Bank has been a development partner to Croatia since 1993. We have been a partner of the City of Rijeka through technical assistance and investments and accompanied the development of the city for the last 20 years.

In the transport sector, specifically, we have supported five major projects, amounting to more than half billion euro, including support to the Port of Rijeka since 2004, through two projects, providing EUR220 million.

The World Bank has also supported the development of the Port of Ploče, and we are currently heavily involved in the restructuring and modernization of the railways and roads companies and in the financing for both sub-sector. In the greater Rijeka area, we supported investments in the sewage system to protect water sources used by Rijeka and reduce pollution of coastal waters. We have supported the University of Rijeka in setting up a Technology Transfer Office creating tools to facilitate the transfer of R&D and new technologies to the business sector; and we have helped establish the Rijeka Science and Technology Park, STePRi.

But why so much focus on Rijeka?

The reason is that city of Rijeka, which lies on the Baltic-Adriatic corridor, can truly become a Gateway to Central and Eastern Europe – reaching out to countries such as Hungary, Poland, Ukraine and beyond – in addition to being a key destination for business and tourism.

For this to happen, however, the Port Authority, the City, the private sector and financiers, need to work together and adopt an integrated approach to help the Port reach its potential.

We believe that the competitiveness of Rijeka as a port city needs to be improved and this requires: (i) the modernization of strategic port facilities and improving the Port of Rijeka Authority’s financial performance; (ii) improving road and rail access to the port and improving the port city environment, while better integrating Rijeka into international transport corridors, and (iii) increasing private sector involvement in the port and in the city.

I would like to emphasize three points:

First, Rijeka is indisputably the most important port in Croatia.

Rijeka is by far the most important port of Croatia, with over 11 million tons of cargo handled in 2016, or about two-thirds of total Croatian traffic. In addition to having the largest seaport in Croatia, it is also the second economic center (after Zagreb) and the third largest Croatian city (after Zagreb and Split).

Container traffic, in particular, increased by over 50% between 2011 and 2016, a rate much higher than all of the nearby ports in the Norther Adriatic, including Koper and Trieste. Total container traffic of the port of Rijeka places Rijeka at the same level of the port of Ravenna in Italy.

Many economic benefits are associated with well-functioning ports, as these lower the costs of trade and thus help generate added value and employment for the whole country.

A recent OECD study shows that one ton of port throughput is on average associated with 100 US dollars of economic value added; and one million tons of extra port throughput helps increase employment in the port region by some 300 jobs.

Benefits from ports spill over to other areas. Firms in other regions also benefit from efficient ports when exporting and importing. The majority of links with other sectors mostly take place outside the port region, including in the capital or main economic center, even when the latter is far away. For example, the ports of Le Havre and Marseille in France have impacts on the Paris region.

Developed ports lead to developed countries. The direct, and especially the indirect share of Rijeka port’s activity on the national income of Croatia is not to be ignored. With full utilization of the port’s capabilities, almost half a percent of GDP can be generated from Rijeka – and if multiplier effects are considered, the impact can be even more powerful.

Many countries succeeded in transforming themselves largely through the efficiency of their ports. China, Singapore, Ireland and Chile are diverse examples of such success stories, where the whole country stood behind its port sector and flourished along with it.

It is important to keep in mind that the world is changing rapidly and the world of ports even more so. Ports are successful because their owners, managers and promoters are constantly aware of synergies and competition, of the merits of location as well as of flows of trade, of technology changes, of geopolitics, and of need to adapt to markets and leverage the surroundings they are in.

Third, Rijeka depends on a well-functioning transport system and partnerships to achieve its potential.

The Rijeka Port system is not alone in the neighborhood. Other ports in the Adriatic – and elsewhere in the Mediterranean – compete to attract traffic. Other routes and transport modes compete as well, in a constantly changing environment. This is the constant threat of any port - but also brings opportunities. And in the opportunities too, Rijeka is not alone.

The success of the Croatian part of the Rijeka Gateway and of its corridors will depend largely on making sure all of its components will work in harmony. Corridors are the embodiment of this necessary harmony. They evolve through partnerships and alliances – both internationally and within the country. Reaching out to corridor coordinators is a must for highlighting the synergies with connecting infrastructure.

The Ministry of Sea, Transport and Infrastructure has a key role in coordinating the efforts of the Port of Rijeka Authority as well as to make sure the road and rail sector companies work efficiently and the needed infrastructure happen.

The World Bank is supporting the development of the transport sector in Croatia as a whole, with particular emphasis on the efficiency of the corridors. Much of the infrastructure, for road and rail access to the port, has been - and is being - supported by World Bank loans and technical assistance.

We are helping in the road sector reform, to make sure the motorways are paying for themselves and that operations are efficient, as well as to improve maintenance in the rest of the network.

We are also supporting the reform of the rail sector, that is clearly now a weak link to the competitiveness of Rijeka as a gateway. New private operators have entered the market but both infrastructure and operations are far from the level of service provided by Koper and other competitors, hence more is needed to accelerate reforms and attract investment.

The importance of partnerships at the city level should also not be ignored. The seafront has a great potential and the port-city interface can be greatly improved, as the Rijeka Gateway Program is not only about construction and modernization of the port. It is also about reconfiguring the port so that some industrial operations can be moved off the waterfront, making room for citizens, tourists and business, and making the city more livable and more attractive to tourists. A lot can be done if a common vision is developed in Rijeka and if other parties, such as the central government, the Ministries, the Port and the City come together.

To conclude, Rijeka can become the obvious and indispensable element of European corridors.

We are glad – and proud – to contribute to Rijeka's current performance and potential. Rijeka is transforming into an increasingly competitive port in the Northern Adriatic.

The Rijeka port now looks - and is - dramatically different from before. To the east and west of the city center, the two container terminals: the extended one at Brajdica and the new deep sea Zagreb facility about to finish construction, will increase the Port’s prior capacity by a factor of five. Better road connections are speeding up container transport from Brajdica container terminal and the Government is finally taking steps to complete the road and railways interconnections needed for fully utilizing Zagreb terminal.

We are in a good place already but we cannot lose time. For the port and the city to fully prosper bringing economic benefits beyond the port and improving the quality of life of its inhabitants and for the citizens of Rijeka, there is a need for a more resolute approach to the Port’s development.

This approach must envision the Port of Rijeka, as a creator of major added value for the whole Croatian economy and hence ensure Rijeka Gateway Port is truly recongised by all parties - Government, the Ministry, Port Authorities, the city authorities, the road and railway companies – as the major national program as it truly is.

We at the World Bank see the role the Rijeka Port represents for Croatia and will continue to support such vision.